Predictability Involves Understanding What Caused What And Why

ie cause and effect; there are 3 stages to this

i) describing the phenomenon you wish to understand (need more than 1 or 2 success stories)

ii) classifying the phenomena into categories, eg vertical and horizontal integration are examples of corporate diversification. This is a critical stage

iii) articulating a hypothesis that postulates what causes the phenomenon to occur. This illustrates how in different circumstances (situations or contexts) the same causal mechanism might result in different outcomes.

(NB Keep revisiting these 3 steps to refine predictability and what actions cause what results and under what circumstances)

"...The foundation for predictability only begins to be built when the researcher sees the same causal mechanisms create a different outcome from what he or she expected - an anomaly. This prompts the researcher to define what it was about the circumstance or circumstances in which the anomaly occurred that caused the identical mechanism to result in a different outcome......when......categories of circumstances are defined, things get predictable. We can state what will cause what and why, and can predict how the statement of causality might vary by circumstance..."

Clayton Christensen et al, 2003

On the other hand, business building is not perfectly predictable for the following reasons

i) nature of competitive marketplace - organisations need to behave unpredictably otherwise they would be relatively easy to beat

ii) any system can produce a large number of possible outcomes

iii) complexity theory suggests that even fully determined systems can generate completely random outcomes.

It has been suggested that many outcomes are unpredictable, as we do not understand the process!!!!!!!!!

Remember:

"...it actually is the discovery of phenomena that the existing theory cannot explain that enables researchers to build a better theory that is based upon a better classification system..."

Clayton Christensen et al, 2003

This is called anomaly-seeking research.

 

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